The logic was sound, but reality interfered

Transcription

1 The World Bank Group and the Chad-Cameroon Oil & Pipeline Project The logic was sound, but reality interfered IEG Program Assessment Report, page 26 Korinna Horta,Ph.D. Joint Session IEG-Urgewald-Relufa World Bank/IMF Spring Meetings April 22,2010

2 Initial cost estimate in 2000: US $ 3.5 Billion Cost estimate in 2008: US $ 6.5 Billion

3 U.S. Statement to the World Bank s Board of Executive Directors June 6, 2000 On a broader plane we must expect that it [the Chad/Cameroon Pipeline Project] will also unquestionably be a prism through which the world views this institution and, it is likely, development assistance more broadly. The stakes could not be higher.

4 WBG Management Arguments: The project provides a unique opportunity for IFC and the Bank to play a significant complementary role in reducing poverty in one of Africa s poorest regions. (Project Appraisal Document, April 20, 2000, page 12) Chad has successfully put in place democratic political institutions. (Project Appraisal Document, April 20, 2000, page 121) an unprecedented framework to transform oil wealth into benefits for the poor (World Bank press release June 6, 2000)

5 A Model Project According to the PAD, one of the project s key goals was that it provide a model for analyzing and mitigating environmental and social impacts for petroleum operations, as well as large-scale infra-structure and other investments. (Project Appraisal Document, April 20, 2000, p. 8 )

6 IEG s Program Performance Assessment Report November Examines all of the WBG supported investments and capacity-building efforts -Provides valuable insights and should generate compulsory lessons for all future investments in extractive industries and in other high risk ventures

7 The logic was textbook perfect except for the revealed weakness of every link in the chain. (IEG report,p.38)

8 IEG evaluation is first project-based joint assessment by IEG-WB and IEG-IFC. The World Bank withdrew from the project in 2008 citing Chad s violations of loan agreements. IFC continues to be engaged in the project until today. Private sector in Chad not immune to political interference.

9 Some of IEG s Findings Fundamental objective of reducing poverty has not been met. Furthermore the oil revenue windfall was associated with resurgence of civil conflict and a worsening of governance. p.35 Deterioration of non-oil economy after the project became operational.

10 Poverty developments were not adequately monitored, a serious shortcoming for a program whose main objective was poverty reduction through the use of oil revenue. (IEG report, p. 23) The Achilles Heal: Capacity-Building: the attempt to support capacitybuilding activities concurrently with the main project proved unsuccessful. (IEG report, p. xvi)

11 IEG Report Inconsistency: WBG involvement was critical for the satisfactory handling of the direct environmental and social impact of the oil development and pipeline construction. IEG Report p.9 Indigenous Peoples OD 4.20 requires their informed participation and the development of an indigenous peoples plan. The IEG report recognizes that financial and management problems at FEDEC, the foundation set up to comply with OD 4.20, is likely to have serious negative impacts on indigenous peoples.

12 Critical Lesson investment decisions have been insufficiently responsive to genuine community-driven demands, and improving such responsiveness should be a major objective in the future. IEG Report p. 21

13 The Extractive Industries Review (EIR) -Commissioned in early EIR Report published in late 2003 Central EIR recommendation: No World Bank promotion of increased private investment in Extractive Industries where governance is inadequate.

14 Key EIR criteria for investments in EI: -Quality of the rule of law; -Absence of armed conflict or risk of such conflict; -Respect for labor and human rights; -Protection of the rights of indigenous peoples

15 Operations Evaluation Department the Bank should not support increased EI investment on the assumption that the Bank s parallel efforts to strengthen governance will mitigate current risks (OED, January 2003) The World Bank Group should adopt a phased approach: Ensure that government capacity to address environmental impacts and to equitably manage revenues exist BEFORE investing in EI.

16 IEG Report argues for continued WBG involvement in extractive industries however risky it may be IEG Report p.viii NEED TO EXAMINE WHOSE RISKS WE ARE REFERRING TO HERE! World Bank loans have been repaid through a special escrow account, Bank management and staff responsible for the project have advanced in their careers or are enjoying well-financed retirement.